Legal And Institutional Framework For Green Finance And Sustainable Development In Nigeria

Abstract

Despite the growing recognition of green finance as an important tool for advancing sustainable
development, there is a lack of a comprehensive legal provisions that mandates green financial
practices in Nigeria, and existing policies lack the necessary enforcement mechanisms,
incentives, and clarity to attract significant investment in environmentally sustainable projects.
Also, the absence of standard definitions and taxonomies places a limit on effective mobilization
and deployment of green finance. These shortcomings can significantly impede Nigeria's ability
to transition to a low-carbon economy, meet its climate commitments, and achieve its
sustainable development goals. Therefore, this article examines the legal and institutional
frameworks that govern green finance in Nigeria, highlighting their role in advancing sustainable
development. Using doctrinal methodology, it explores existing laws, policies, and institutional
mechanisms, identifies regulatory gaps, and proposes actionable recommendations to strengthen
Nigeria’s green finance landscape. The study finds that there is still a need for strong legal and
institutional frameworks that support green finance in Nigeria because the availability of these
frameworks provides the regulatory structure, financial mechanisms, and policy direction
needed to align Nigeria’s economic growth with environmental sustainability. It is
recommended amongst other things, that Nigeria should enact a Green Finance Act that
mandates green finance practices across sectors, including financial institutions, corporations,
and investors to ensure effective alignment with sustainability growth.